Baker to leave Home Depot - Mark Baker, vice president for merchandising - Brief Article

Home Channel News, June 18, 2001 by Mari Georgeson

Dealer searching to fill chief merchant's slot

ATLANTA -- Mark Baker, a fast-rising executive at Home Depot who currently is its executive vp-merchandising, will leave the company this summer to pursue opportunities outside of the home improve ment field, according to Jerry Shields, a company spokesman.

Shields added that Baker had in formed Depot's president and CEO Robert Nardelli about his plans several months ago. However, there was no evidence that Baker's role was short term when he joined Nardelli during a teleconference to report the chain's first quarter results, and answered questions about the company's strategies and pro grams. Shields said Baker would continue to play an integral part until a successor is named.

In a prepared statement, Nardelli was quoted as saying that he would work closely with the chain's senior staff and Board of Directors to name Baker's successor "as soon as possible." Shields said Home Depot was looking both outside and inside the company for that replacement. "We've got a lot of great people right here. Baker has created a very deep merchandising bench," he added.

The 43-year-old Baker, a fitness enthusiast and pilot during his off hours, joined Home Depot in 1996 from HomeBase, where he had been executive vp-merchandising. It wasn't long before Baker seemed as if he were being groomed for bigger things, based on his upward trajectory through its corporate ranks. When Home Depot first began experimenting with cross-docking with third-party carriers, Baker was put in charge of that effort. When the company encountered significant negative publicity about the safety of its stores, Baker served as its spokesman and most visible defender. He also served as group president of Depot's Mid-South and Southern divisions.

He was promoted in March 2000 to chief operating officer of U.S. stores. But Home Depot eliminated that position in October of that year. By that time, Home Depot's cofounders had decided to go outside the company for its next president and CEO. Nardelli joined Home Depot from General Electric in December.

Analysts agreed that the loss of its chief merchant could hurt the company. "It's a significant loss. It's obviously a worry," said Bud Bugatch, an analyst at Raymond James & Associates.

"Obviously, Nardelli doesn't want to see such a strong executive leave. The longer he stays during the transition period, the more that can be learned from him," another analyst said.

There has been considerable speculation in recent months among suppliers that Home Depot is about to reveal a significant change in the organizational structure of its merchandising. Vendors have contended -- and company officials have denied -- that Depot plans to consolidate its buying offices at some point. It could not be ascertained whether such a move, if true, influenced Baker's resignation decision.

Sales growth emphasized

Baker is leaving at a time when Nardelli has set ambitious goals for the company. He assured investors last month that Home Depot would reach $100 billion in annual sales, although he did not commit to a specific timetable for hitting that plateau. Some of that growth is expected to come from installed sales, which in recent years have been expanding at a 40 percent annual clip, and last year accounted for $2 billion in revenue (or only 1.3 percent of the total installation market, by the company's reckoning.)

"They have done such a good job of creating their brand, now they can use that brand to sell services, which are higher mar gin," said Dave Schick, an analyst with Robinson-Humphrey.

Last year, around 30 percent of Home Depot's $46 billion in revenue came from pros, whom Nardelli noted "spend about $3 for every $1 the DIYer spends." Depot intends to install its Pro Initiative program -- which in cludes pro-specific products and services, including job site delivery and outside salespeople -- in 335 stores this year.

By year's end the company also expected to have its Store Productivity Initiative installed chainwide. SPI assigns teams of store associates to sales-only functions and confines the restocking of shelves to after business hours. In stores where it's been executed, Home Depot has seen sales-per-employee-selling-hour increase by 25 percent.

At the meeting, shareholders approved the re-election of 10 directors, and the appointment of two others: Claudio X. Gonzalez, chairman and chief executive of Kimberly-Clark de Mexico, S.A. de C.V.; and Roger Penske, chairman of Penske Corp. Both are also board members of General Electric.